Office construction pipeline strengthens

Office construction activity is poised for growth as a sharp increase in planning approvals boosts the pipeline of future office building projects across the UK.

According to Glenigan, the value of underlying office schemes securing detailed planning approval surged by 107% during the second quarter, creating a strong workload of projects expected to commence over the coming year. The increase reflects continuing demand for Grade-A office space, refurbishment projects and sustainable workplaces in major city centres.

Glenigan economics director Allan Wilén says: “Although project starts and contract awards fell compared with the previous year, detailed planning approvals more than doubled, signalling a substantial increase in proposed future development activity.

“The outlook for the sector is supported by continued demand for high-quality office space in key urban areas. Strong planning activity suggests developers remain committed to bringing forward projects despite ongoing market uncertainty.”

Office schemes approved in the most recent quarter range from a £70 million plan to retrofit a 35-year-old Postmodern former Lloyds Bank building in Bristol (Project ID: 25444090) to the £340 million 1 Silk Street development at Barbican in central London (pictured), which should start in 2029 (Project ID: 24348602).

Underlying approvals

There is a strong pipeline of underlying office projects with detailed planning permission.

Glenigan’s market data identified more than 1,200 approved office schemes expected to start on site in the next 12 months, and proposals in southern England are swelling this workload.

London has the largest amount of approved office projects as developers and owners look to upgrade space to Grade-A and improve lease values.

Among the 275 proposals due to start in the next year are Bayshore Estates £64.4 million revamp of offices at Chiswell Street in Islington (Project ID: 24018569) and Berkeley Estates £70 million redevelopment of 50 Stratton Street in Westminster (Project ID: 20395196).

The South East has the next largest number of office schemes ready to go with 161 projects due to begin construction in the forthcoming year.

The £14.6 million Centenary Quay in Southampton will provide 4,500 square metres of office space and a start is due later this summer (Project ID: 25254887). In Guildford, a £26 million revamp of offices on Farnham Road should commence before the Autumn (Project ID: 23163564).

Major client

The biggest contract award for an office project in the last 12 months is Landsec’s £282 million 55 Old Broad Street development in the City of London, which was recently secured by the UK arm of Swedish giant Skanska (Project ID: 23179273).

One of the sector’s oldest and biggest clients, Landsec has a host of other office schemes at various stages of procurement.

These range from a £9 million scheme on Albion Street in Leeds that is at the tender stage (Project ID: 24264236) to the £165 million second phase of the Timber Square development in London, where a start is expected next year (Project ID: 24314694).

Office growth

The recent dip in starts and awards is expected to be temporary, and Glenigan forecasts a 21% leap in underlying starts this year. Mr Wilén adds: “Demand remains firmly concentrated in high-quality, sustainable office space, as occupiers prioritise energy efficiency and flexible working environments.”

Geopolitical disruption is likely to dampen workload next year, but a return to growth is expected in 2028 as a shift towards hybrid working continues to support remodelling activity and produce opportunities for a host of new build and renovation projects.